Norwegian airline clouds open skies

A Norwegian airline has managed to start a fight between Europe and the United States, annoy Hillary Clinton, threaten transatlantic trade talks and anger some of the biggest names in aviation — all over plans to offer cheap flights to Boston.

Norwegian Air has been waiting two years for approval for its Ireland-registered offshoot, Norwegian Air International (NAI), to start direct flights from Cork and Shannon to Boston, and later New York.

Approval for such a move is supposed to be fairly straightforward thanks to the ‘open skies’ agreement, which allows any EU or U.S. airline to fly between any point in each other’s jurisdiction.

But U.S. regulators are stalling, under pressure from some in Congress and even presidential hopeful Clinton, and that has annoyed the EU.

“Norwegian Air has the Irish government, the EU, major airports, airlines and businesses on its side” — CEO Tore Kristian Jenssen

In a late July letter to U.S. Transport Secretary Anthony Foxx, European Transport Commissioner Violeta Bulc said delays in approving the airline’s right to fly were “regrettable” after “two years of deliberations and despite the patience and the goodwill that the EU has shown.”

Bulc went on to warn that the conflict could threaten EU-U.S. trade talks: “We should carefully consider the implications that this long and protracted dispute could have, for example in the TTIP negotiations.”

The European Commission last month gave formal notice that it intends to take the dispute to arbitration, a process that could start in September.

“NAI has the Irish government, the EU, major airports, airlines and businesses on its side so it’s difficult to see the arbitration case going against our favor,” he said.

Flouting labor laws

Critics of NAI such as Democratic Congressman Peter DeFazio, who has played a prominent role in trying to block the airline, say Norwegian Air wants to have crew employed under Asian work contracts serving on its transatlantic flights, and that the Irish offshoot was created to side-step labor laws in its home country.

In a July 28 response to Bulc obtained by POLITICO, DeFazio said the airline should not be allowed to plant the “weed of this unsustainable business model in the fertile soil” of the international aviation market.

U.S. Congressman Peter DeFazio said Norwegian Air wants to side-step labor laws in its home country | Alex Wong/Getty Images

“If Norwegian were a U.S. carrier these practices would not be acceptable under U.S. labor laws, and I am confident that they are not acceptable under the laws of Norway,” DeFazio wrote.

But in April, the U.S. Department of Transportation issued a proposed approval of NAI’s application, saying the main argument opponents have used — that NAI’s business model violates labor standards in the open skies pact — “does not afford a basis for rejecting an applicant that is otherwise qualified to receive a permit.”

NAI denies it is breaking any rules, saying all of its 400 pilots and 900 air cabin crew have European work contracts. The company has also promised U.S. regulators that it will stick to European or U.S. employment contracts on transatlantic flights.

Opponents also point to NAI’s base in Ireland, arguing it is a flag of convenience helping it gain access to the U.S. market via the backdoor as Norway is not an EU member, although it is a party to the open skies agreement.

Addressing complaints about its status as an Irish carrier, NAI says the more than 40 aircraft it currently has shuttling passengers between various European destinations show that it is a fully operational commercial airline.

But NAI’s planes are still not allowed into U.S. airspace and the airline is caught in an increasingly vicious political crossfire.

Some U.S. legislators — backed by major U.S. airlines, pilot associations on both sides of the Atlantic and labor unions — are continuing to try and block final approval.

“Workers in the U.S. airline industry deserve rules of the road that support a strong workforce with high labor standards — not attempts by airlines to flout labor standards and outsource good-paying jobs,” Clinton’s campaign said in a May statement. “Hillary Clinton urges the Obama Administration against moving forward with final approval of Norwegian Air International’s application.”

Ryanair is discussing a deal with NAI that would feed transatlantic passengers into its European network.

The Irish aviation regulator said that it had given approval to NAI to operate and therefore the airline should be treated as an Irish company with full rights to fly to the U.S. under open skies.

Juliusz Komorek, Ryanair’s chief legal officer, said in a submission to the U.S. Department of Transportation that legislation aimed at blocking Norwegian’s approval is “an ill-advised attempt to protect the incumbent airlines on the transatlantic market at the expense of consumers.”

Ryanair is discussing a deal with NAI that would feed transatlantic passengers into its European network.

Bargain fares

That potential agreement with Ryanair underscores the problem for legacy airlines — that NAI may eat into the profits made on their lucrative transatlantic routes by shuttling passengers from major U.S. destinations to Ireland, and then quickly on to the rest of Europe.

Norwegian Air executives have suggested offering $69 one-way fares over the Atlantic, and promised a rapid roll-out of services from airports across Ireland once approval is granted.

Norwegian Air has been waiting two years for U.S. permission | Johan Nilsson/EPA

For flights scheduled in 2016 the big three U.S. carriers — American, Delta and United — covered 43 percent of all transatlantic flights, according to aviation data intelligence company OAG. The top three European airlines — British Airways, Lufthansa and Air France — accounted for 22 percent.

But those airlines are already under pressure on long-haul routes from government-backed Middle Eastern and Asian airlines — competition that is likely to stiffen as the Association of Southeast Asian Nations, Turkey, the United Arab Emirates and Qatar negotiate their own open skies agreements with the EU.

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Wellwell

69 Euros? Does that translate into zero leg space and hand luggage only … Can’t wait to spend 8 hours in a sardine can.

Posted on 8/31/16 | 9:02 PM CET

BoopDoop

Oh yes, it’s nice to know that the airline’s are lining our politician’s pockets in addition to tons of other corporations. Sounds like the politicians are just making up BS in a petty attempt to make NAI look bad. It makes sense for them not to want Americans to travel cheaply across the pond, we might realize how much better off we’d be if we were Europeans. I for one cannot wait to take advantage of those cheap fares to and from Europe, who cares if it’s cramped? All flights are uncomfortable unless you’re rich enough for 1st class.